Lattice Semiconductor Reports First Quarter 2020 Results

These non-GAAP measures are included solely for informational and comparative purposes and are not meant as a substitute for GAAP and should be considered together with the consolidated financial information located in the tables attached to this press release.

About Lattice Semiconductor Corporation:

Lattice Semiconductor (NASDAQ: LSCC) is the low power programmable leader. We solve customer problems across the network, from the Edge to the Cloud, in the growing communications, computing, industrial, automotive and consumer markets. Our technology, long-standing relationships, and commitment to world-class support lets our customers quickly and easily unleash their innovation to create a smart, secure and connected world.

For more information about Lattice, please visit www.latticesemi.com. You can also follow us via LinkedIn, Twitter, Facebook, YouTube, WeChat, Weibo or Youku.

Lattice Semiconductor Corporation

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

 

March 28,

 

December 28,

 

March 30,

 

 

2020

 

2019

 

2019

Revenue

 

$

97,316

 

 

$

100,237

 

 

$

98,091

 

Cost of sales

 

 

39,754

 

 

 

40,944

 

 

 

40,439

 

Gross margin

 

 

57,562

 

 

 

59,293

 

 

 

57,652

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

21,693

 

 

 

19,543

 

 

 

19,665

 

Selling, general, and administrative

 

 

22,551

 

 

 

20,924

 

 

 

20,781

 

Amortization of acquired intangible assets

 

 

2,640

 

 

 

3,390

 

 

 

3,389

 

Restructuring

 

 

940

 

 

 

(55

)

 

 

1,341

 

Total operating expenses

 

 

47,824

 

 

 

43,802

 

 

 

45,176

 

Income from operations

 

 

9,738

 

 

 

15,491

 

 

 

12,476

 

Interest expense

 

 

(1,077

)

 

 

(1,184

)

 

 

(4,987

)

Other (expense) income, net

 

 

(50

)

 

 

(228

)

 

 

153

 

Income before income taxes

 

 

8,611

 

 

 

14,079

 

 

 

7,642

 

Income tax expense

 

 

444

 

 

 

92

 

 

 

234

 

Net income

 

$

8,167

 

 

$

13,987

 

 

$

7,408

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.06

 

 

$

0.10

 

 

$

0.06

 

Diluted

 

$

0.06

 

 

$

0.10

 

 

$

0.05

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

134,253

 

 

 

133,691

 

 

 

130,992

 

Diluted

 

 

138,044

 

 

 

138,196

 

 

 

134,810

 

Lattice Semiconductor Corporation

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

 

 

March 28,

 

December 28,

 

 

2020

 

2019

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

176,572

 

 

$

118,081

 

Accounts receivable, net

 

 

68,643

 

 

 

64,917

 

Inventories

 

 

48,932

 

 

 

54,980

 

Other current assets

 

 

24,531

 

 

 

24,452

 

Total current assets

 

 

318,678

 

 

 

262,430

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

39,933

 

 

 

39,230

 

Operating lease right-of-use assets

 

 

22,212

 

 

 

23,591

 

Intangible assets, net

 

 

4,323

 

 

 

6,977

 

Goodwill

 

 

267,514

 

 

 

267,514

 

Deferred income taxes

 

 

476

 

 

 

478

 

Other long-term assets

 

 

11,069

 

 

 

11,796

 

 

 

$

664,205

 

 

$

612,016

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and other accrued liabilities

 

$

67,679

 

 

$

73,650

 

Current portion of long-term debt

 

 

21,484

 

 

 

21,474

 

Current portion of operating lease liabilities

 

 

4,564

 

 

 

4,686

 

Total current liabilities

 

 

93,727

 

 

 

99,810

 

 

 

 

 

 

 

 

 

 

Long-term debt, net of current portion

 

 

170,791

 

 

 

125,072

 

Long-term operating lease liabilities, net of current portion

 

 

20,172

 

 

 

21,438

 

Other long-term liabilities

 

 

36,556

 

 

 

38,028

 

Total liabilities

 

 

321,246

 

 

 

284,348

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

342,959

 

 

 

327,668

 

 

 

$

664,205

 

 

$

612,016

 

Lattice Semiconductor Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

 

March 28,

 

March 30,

 

 

2020

 

2019

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

8,167

 

 

$

7,408

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

7,793

 

 

 

8,403

 

Stock-based compensation expense

 

 

8,728

 

 

 

3,686

 

Other non-cash adjustments

 

 

1,509

 

 

 

2,801

 

Net changes in assets and liabilities

 

 

(5,094

)

 

 

(540

)

Net cash provided by operating activities

 

 

21,103

 

 

 

21,758

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(3,867

)

 

 

(3,074

)

Other investing activities

 

 

(2,775

)

 

 

7,916

 

Net cash (used in) provided by investing activities

 

 

(6,642

)

 

 

4,842

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of long-term debt

 

 

50,000

 

 

 

 

Repayment of long-term debt

 

 

(4,375

)

 

 

(26,875

)

Net cash flows related to stock compensation exercises

 

 

(1,484

)

 

 

11,568

 

Net cash provided by (used in) financing activities

 

 

44,141

 

 

 

(15,307

)

Effect of exchange rate change on cash

 

 

(111

)

 

 

47

 

Net increase in cash and cash equivalents

 

 

58,491

 

 

 

11,340

 

Beginning cash and cash equivalents

 

 

118,081

 

 

 

119,051

 

Ending cash and cash equivalents

 

$

176,572

 

 

$

130,391

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information and non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Interest paid

 

$

1,113

 

 

$

4,383

 

Income taxes paid, net of refunds

 

$

852

 

 

$

280

 

Lattice Semiconductor Corporation

Supplemental Historical Financial Information

(unaudited)

 

 

 

Three Months Ended

 

 

March 28,

 

December 28,

 

March 30,

 

 

2020

 

2019

 

2019

Balance Sheet Information

 

 

 

 

 

 

 

 

 

 

 

 

A/R Days Revenue Outstanding (DSO)

 

 

64

 

 

 

59

 

 

 

52

 

Inventory Days (DIO)

 

 

112

 

 

 

123

 

 

 

151

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue% (by Geography)

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

 

71

%

 

 

73

%

 

 

71

%

Europe (incl. Africa)

 

 

12

%

 

 

11

%

 

 

12

%

Americas

 

 

17

%

 

 

16

%

 

 

17

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue% (by End Market)

 

 

 

 

 

 

 

 

 

 

 

 

Communications and Computing

 

 

39

%

 

 

38

%

 

 

36

%

Industrial and Automotive

 

 

43

%

 

 

39

%

 

 

37

%

Consumer

 

 

14

%

 

 

18

%

 

 

20

%

Licensing and Services

 

 

4

%

 

 

5

%

 

 

7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue% (by Channel)

 

 

 

 

 

 

 

 

 

 

 

 

Distribution

 

 

78

%

 

 

84

%

 

 

79

%

Direct

 

 

22

%

 

 

16

%

 

 

21

%

Lattice Semiconductor Corporation

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

March 28,

 

December 28,

 

March 30,

 

 

2020

 

2019

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Gross margin

 

$

57,562

 

 

$

59,293

 

 

$

57,652

 

Stock-based compensation - gross margin

 

 

591

 

 

 

440

 

 

 

202

 

Inventory adjustment related to restructured operations

 

 

 

 

 

 

 

 

(338

)

Non-GAAP Gross margin

 

$

58,153

 

 

$

59,733

 

 

$

57,516

 

Gross Margin % Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Gross margin %

 

 

59.1

%

 

 

59.2

%

 

 

58.8

%

Cumulative effect of non-GAAP Gross Margin adjustments

 

 

0.7

%

 

 

0.4

%

 

 

(0.2

)%

Non-GAAP Gross margin %

 

 

59.8

%

 

 

59.6

%

 

 

58.6

%

Research and Development Expense % (R&D Expense %) Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP R&D Expense %

 

 

22.3

%

 

 

19.5

%

 

 

20.0

%

Stock-based compensation - R&D

 

 

(2.7

)%

 

 

(1.6

)%

 

 

(1.1

)%

Non-GAAP R&D Expense %

 

 

19.6

%

 

 

17.9

%

 

 

18.9

%

Selling, General, and Administrative Expense % (SG&A Expense %) Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP SG&A Expense %

 

 

23.2

%

 

 

20.9

%

 

 

21.2

%

Stock-based compensation - SG&A

 

 

(5.7

)%

 

 

(3.5

)%

 

 

(2.4

)%

Non-GAAP SG&A Expense %

 

 

17.5

%

 

 

17.4

%

 

 

18.8

%

Operating Expenses Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Operating expenses

 

$

47,824

 

 

$

43,802

 

 

$

45,176

 

Stock-based compensation - operations

 

 

(8,137

)

 

 

(5,124

)

 

 

(3,484

)

Amortization of acquired intangible assets

 

 

(2,640

)

 

 

(3,390

)

 

 

(3,389

)

Restructuring charges

 

 

(940

)

 

 

55

 

 

 

(1,341

)

Impairment of acquired intangible assets

 

 

 

 

 

 

 

 

1,023

 

Non-GAAP Operating expenses

 

$

36,107

 

 

$

35,343

 

 

$

37,985

 

Income from Operations Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Income from operations

 

$

9,738

 

 

$

15,491

 

 

$

12,476

 

Stock-based compensation - gross margin

 

 

591

 

 

 

440

 

 

 

202

 

Inventory adjustment related to restructured operations

 

 

 

 

 

 

 

 

(338

)

Stock-based compensation - operations

 

 

8,137

 

 

 

5,124

 

 

 

3,484

 

Amortization of acquired intangible assets

 

 

2,640

 

 

 

3,390

 

 

 

3,389

 

Restructuring charges

 

 

940

 

 

 

(55

)

 

 

1,341

 

Impairment of acquired intangible assets

 

 

 

 

 

 

 

 

(1,023

)

Non-GAAP Income from operations

 

$

22,046

 

 

$

24,390

 

 

$

19,531

 

Income from Operations % Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Income from operations %

 

 

10.0

%

 

 

15.5

%

 

 

12.7

%

Cumulative effect of non-GAAP Gross Margin and Operating adjustments

 

 

12.7

%

 

 

8.8

%

 

 

7.2

%

Non-GAAP Income from operations %

 

 

22.7

%

 

 

24.3

%

 

 

19.9

%

Lattice Semiconductor Corporation

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)

 

Income Tax Expense Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Income tax expense

 

$

444

 

 

$

92

 

 

$

234

 

Estimated tax effect of non-GAAP adjustments (1)

 

 

280

 

 

 

(11

)

 

 

(98

)

Non-GAAP Income tax expense

 

$

724

 

 

$

81

 

 

$

136

 

Net Income Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net income

 

$

8,167

 

 

$

13,987

 

 

$

7,408

 

Stock-based compensation - gross margin

 

 

591

 

 

 

440

 

 

 

202

 

Inventory adjustment related to restructured operations

 

 

 

 

 

 

 

 

(338

)

Stock-based compensation - operations

 

 

8,137

 

 

 

5,124

 

 

 

3,484

 

Amortization of acquired intangible assets

 

 

2,640

 

 

 

3,390

 

 

 

3,389

 

Restructuring charges

 

 

940

 

 

 

(55

)

 

 

1,341

 

Impairment of acquired intangible assets

 

 

 

 

 

 

 

 

(1,023

)

Estimated tax effect of non-GAAP adjustments (1)

 

 

(280

)

 

 

11

 

 

 

98

 

Non-GAAP Net income

 

$

20,195

 

 

$

22,897

 

 

$

14,561

 

Net Income Per Share Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net income per share - basic

 

$

0.06

 

 

$

0.10

 

 

$

0.06

 

Cumulative effect of Non-GAAP adjustments

 

 

0.09

 

 

 

0.07

 

 

 

0.05

 

Non-GAAP Net income per share - basic

 

$

0.15

 

 

$

0.17

 

 

$

0.11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net income per share - diluted

 

$

0.06

 

 

$

0.10

 

 

$

0.05

 

Cumulative effect of Non-GAAP adjustments

 

 

0.09

 

 

 

0.07

 

 

 

0.06

 

Non-GAAP Net income per share - diluted

 

$

0.15

 

 

$

0.17

 

 

$

0.11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

134,253

 

 

 

133,691

 

 

 

130,992

 

Diluted - GAAP (2)

 

 

138,044

 

 

 

138,196

 

 

 

134,810

 

Diluted - Non-GAAP (2)

 

 

138,044

 

 

 

138,196

 

 

 

134,810

 

(1)

 

We calculate non-GAAP tax expense by applying our tax provision model to year-to-date and projected income after adjusting for non-GAAP items. The difference between calculated values for GAAP and non-GAAP tax expense has been included as the “Estimated tax effect of non-GAAP adjustments.”

(2)

 

Diluted Shares are calculated using the GAAP treasury stock method. In a loss position, diluted shares equal basic shares.


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